Transocean's $1.4B oil spill deal will help Gulf

The Justice Department has reached a $1.4 billion settlement with Transocean Ltd., the owner of the drilling rig that sank after an explosion killed 11 workers and spawned the massive 2010 oil spill in the gulf. On Thursday, Jan. 3, 2013, two people with knowledge of the negotiations say Switzerland-based Transocean would pay the money to resolve the department's civil and criminal probe of the company's role in the Deepwater Horizon disaster.Associated Press File Photo

Associated Press

NEW ORLEANS -- A $1.4 billion settlement between the Justice Department and Deepwater Horizon rig owner Transocean Ltd. will pump hundreds of millions of dollars into projects designed to help the Gulf Coast recover from the nation's largest offshore oil spill.

Transocean, which owned the rig that sank after an explosion killed 11 workers and spawned the 2010 spill in the Gulf of Mexico, agreed Thursday to pay $1 billion in civil penalties and $400 million in criminal penalties and plead guilty to a misdemeanor charge of violating the Clean Water Act.

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Much of the money will fund environmental-restoration projects and spill-prevention research and training. Congress approved legislation that dedicates 80 percent of the civil penalty for environmental and economic recovery projects in the Gulf states.

"While this small step forward will not bring back the 11 lives that were lost or reverse the extraordinary damages caused by the Deepwater Horizon disaster, it is incremental progress in Transocean making it right," Louisiana Gov. Bobby Jindal said in a statement. "Natural resources damages and response costs are excluded from this agreement. Now the focus remains on BP to fulfill the commitments of their PR campaign to put this tragedy behind us."

The proposed settlement resolves the Justice Department's civil and criminal probes of Transocean's role in the Deepwater Horizon rig disaster. The deal, which is subject to a federal judge's approval, also calls for Transocean to implement a series of operational safety and emergency response improvements on its rigs.

"This resolution of criminal allegations and civil claims against Transocean brings us one significant step closer to justice for the human, environmental and economic devastation wrought by the Deepwater Horizon disaster," Attorney General Eric Holder said in a statement.

Transocean said it believes the settlement is in the best interest of its shareholders and employees and eliminates "much of the uncertainty associated with the accident."

"This is a positive step forward, but it is also a time to reflect on the 11 men who lost their lives aboard the Deepwater Horizon," the company said in a statement. "Their families continue to be in the thoughts and prayers of all of us at Transocean."

BP PLC, which leased the rig from Transocean, already has agreed to pay a record $4.5 billion in penalties and plead guilty to manslaughter and other criminal charges related to the spill. The deal with BP doesn't resolve the federal government's civil claims against the London-based oil company.

U.S. Sen. Mary Landrieu, a Louisiana Democrat, said the Transocean settlement will dedicate $800 million of the civil penalty and $300 million of criminal penalty to coastal protection and restoration work.

"While this is an important achievement, I hope it will be one in a series of settlements to bring justice and resolution to our region," she said in a statement.

U.S. Sen. David Vitter, a Louisiana Republican, said he hopes it leads to "much bigger final action with BP, the main culprit in this horrible disaster."

BP spokesman Geoff Morrell said the deal "underscores what every official investigation has found: that the Deepwater Horizon accident resulted from multiple causes, involving multiple parties."

"Transocean is finally starting, more than two-and-a-half years after the accident, to do its part for the Gulf Coast," he said in a statement.

Transocean previously announced it had reserved $2 billion for paying claims related to the Deepwater Horizon disaster.

Transocean also said in a September regulatory filing that it had rejected settlement offers last year from BP and a group of attorneys for Gulf Coast residents and businesses who blame the spill for economic damages. Those claims are still pending.

Last month, U.S. District Judge Carl Barbier in New Orleans gave final approval to a class-action-settlement agreement between BP and a team of private plaintiffs' attorneys. BP estimates it will pay about $7.8 billion to resolve these claims, but the settlement isn't capped.

Barbier also is set to preside over a trial designed to identify the causes of BP's deadly well blowout and assign percentages of fault to the companies involved. The first phase of the trial is scheduled to start Feb. 25.

Alabama Attorney General Luther Strange said the Transocean settlement is "one more step in holding the responsible parties accountable for the catastrophic environmental and economic damage inflicted on Alabama and the entire Gulf Coast."

"There is more work to be done, and Alabama stands ready for trial in February," he said.

But Alabama Gov. Robert Bentley said he was disappointed in the size of the settlement.

"We don't believe this is adequate compensation for the people of Alabama," he said. "We look forward to holding BP and others accountable at trial."

The Deepwater Horizon was drilling in water a mile deep about 50 miles southeast of the Louisiana coast when it exploded on the night of April 20, 2010.

The Justice Department says Transocean crew members on the rig, acting at the direction of BP supervisors, failed to fully investigate clear signs that the well was not secure and that oil and gas were flowing into the well.

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